There are many product-oriented checklists that one can find over the web. Product groups can easily check their readiness to various types of targets, whether its design, development, deployment, launch or sales.
This post is dedicated to a prior stage, the investment phase; the phase at which someone decides on the actual investment in a new idea. That someone can be an Angel Investor, a Venture Capitalist (VC) of some kind, or an enterprise-executive.
Regardless of the funding source, an initial amount of money is always required in order to start a new business. If you are the one to come up with an idea for a new product and are seeking investment, you may find the following pieces of advice helpful.
Make sure that your elevator pitch is clear, sharp and focused
There is no second chance to make a first impression. Make sure you can answer the following questions with clear and unambiguous answers: Who are your customers? What exactly are you selling? How will you make money? Who are your competitors? Why are you better than others?
Arrive at meetings with a working prototype.
Investors are tired of lovely power points. Working for a VC a few years ago, I used to meet with approximately 2-3 entrepreneurs each day who were seeking an investment. That’s about 40 meetings per month, or in other words, that’s 40, cool, power point presentations, each month. Can you imagine my excitement when someone entered the room and instead of opening a ppt, logged-in to a live prototype?
Regardless of the meeting’s outcome, that person immediately got some extra points for being able to walk the talk.
Register your IP if possible
Can you register your IP? If the answer is “Yes”, bring a Provisional Patent Application to meetings.
There are many good ideas out there. Besides being able to execute on your idea, which is an enduring and exhaustive process, having solid IP is always good. Any investor would run the following scenario in their heads.
“Worst case, I will get some return on my investment by selling the IP. Best case, the IP will be a growth driver for the company”.
Either way, registered IP is always a good starting point to any investment related discussion.
Know your target market very well
Here is where you really need that PowerPoint presentation.
- List your direct and indirect competitors (for example, substitute products)
- Prove to the investor that you intimately know their strengths and their weaknesses
- Try to uncover your competitors’ product roadmaps and sale strategies
- List the ways in which you are better than your competitors (product and company wise).
- If you don’t have competitors, discuss the reasons openly with the potential investor. Is it because your product doesn’t have demand to yet?
Know the barriers to a successful ROI. Carefully detail ways to tackle these barriers.
- Strong Competitors who can take you out of the market easily
- No competitors at all, i.e. no market yet
- Not your core expertise (for example, you have an idea for a B2C product while you your expertise is in the B2B arena)
- A large investment is required before you can reach a mature, sellable, product.
No matter what barriers you have to deal with, acknowledging them and tackling them consciously is the most important thing that you can do.
Be willing to commit to a personal investment.
Investors like people who put some skin in the game. Be prepared to commit to the following:
- Quitting your day job.
- Invest their own money in the venture (e.g. taking a mortgage on your house, or getting some personal loans)
- Working from a little or no office at all, till some money starts getting in.
There are countless stories of entrepreneurs who worked from their parents’ basements or garages. Are you willing to become such an entrepreneur?
Getting your first investment is never easy. I can only comfort you by saying that executing on an idea is a much tougher job…. Good Luck.
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